German drugstore owner Goetz Werner’s book Einkommen für Alle, (‘Income for all’) climbed to number 13 in the best sellers’ list of Der Spiegel this year. You might think this an unlikely contribution to the Citizen’s Income debate, but the idea of a Citizen’s Income has re-emerged from the centre-right of European politics as a response to the social costs of unemployment.
According to Werner, people should be provided with a tax-financed basic income that would free people from the need to earn money, rather than trying to create jobs for the many Germans who are still unemployed, an idea that Green Party members might recognise as one we have been proposing for the last thirty years – the Citizen’s Income.
The principle feature of a basic or citizen’s income is that it is paid irrespective of any income from other sources and it is paid without requiring the performance of any work or the willingness to accept a job if offered.
Werner’s ideas are supported by Thomas Straubhaar, head of an influential think tank in Hamburg, who proposes that the system could be financed by a combination of high consumption tax, 25% for example, and direct taxes of the same level on income from work, rentals, investments, dividends and speculation.
In Finland, where the greens are in a coalition government, the Prime Minister Matti Vanhanen of the Centre Party has suggested that such a basic income could be pegged at about 600 euros a month while in Ireland the government is producing a green paper on basic income.
This current interest is being driven by a perceived need to reform social insurance systems. One aim is to reduce the cost of job creation by shifting the social contributions for health and other benefits away from taxes on employment onto taxes on other production factors such as capital and land.
Eco-taxes could also be used to generate the required revenue for such a shift. A Citizen’s Income creates new possibilities for how an economy could be run and could change its overall character. For example, at present low taxation on materials and high taxation on labour makes it cheaper to throw away a broken toaster than to get it fixed. If we removed the tax on labour – halving labour costs say, and increased the taxes on materials and energy, we might end up with an economy where it was cheaper to repair an item than throw it away and buy a new one.
One of the additional key green benefits of an increase in the labour intensity of production processes would be a reduction in the need for ever increased growth in order to maintain employment levels.
The Green Economics Institute (GEI), like the Green Party, suggests a comprehensive reform of the tax system where revenues for a Citizen’s Income could be raised by taxing economic or environmental bads much more heavily than at present. A Green Party conference in the European
Parliament in July was well attended by many representatives of both the GEI and GPEW. Here there was an increased focus on making an even more fundamental change to social security systems: basing them on human rights, rather than on ‘paid contributions’.
The contributors did not just discuss Citizen’s Income in general terms but had modelled the effects of changing the social security system on productivity, labour supply and the properties of such a system for people on low or no income within their own national systems.
Volker Heinemann and I attended this conference, and are working with a pan European Green Group preparing a common economics statement for the European Green Party. This statement sets out to show that a pan European tax system could reduce the destructive activity of corporations by preventing them from escaping taxation by cross border repatriation as is currently the case. This group will prepare a European economics statement in 2008 after the European Green Party Council meeting in Vienna this autumn.
For further information see www.greeneconomics.org.uk or email Miriam Kennet at Miriam.Kennet@yahoo.co.uk. There is also a Green Party economics discussion list and working group convened by Miriam Kennet which is open to all members of the Green Party and which you are most welcome to join by emailing firstname.lastname@example.org.